Fine cut tobacco continued to dominate sales of cigars, cigarillos and smoking tobacco in 2020 with all other products having somewhat of a niche status. Nevertheless, fine cut tobacco continued to see heavy losses in retail volume terms in 2020.
With regard to the other categories, pipe tobacco remained a niche in New Zealand in 2020, as it is perceived as an outdated and traditional tobacco format, mostly purchased by older consumers. Despite this, it actually saw a slower decline in retail volume terms than fine cut tobacco in 2020, which was largely due to its smaller sales base and lower average unit price per kg.
British American Tobacco retained its dominance in smoking tobacco in 2020 but it faced mounting pressure from second-ranked Imperial Tobacco. Both companies offer a variety of brands across the price spectrum with those which were perceived to represent the best value such as British American Tobacco’s Rothmans and Imperial Tobacco’ John Player Special seeing strong growth in 2020, while many premium and higher-priced brands such as Longbeach and Winfield suffered heavy losses as consumers were forced to economise due to the impact of COVID-19.
Having so far been successful in controlling and containing the spread of COVID-19, New Zealand’s economy is expected to start on the path to recovery from 2021 onwards, boosted by the rolling out of its vaccination programme. Nonetheless, this is unlikely to be enough to save fine cut tobacco which is projected to continue on a rapid downward spiral.
Cigarillos is predicted to remain the strongest performer over the forecast period, as it continues to benefit from more price-sensitive consumers of smaller cigars trading down. In addition, by the end of the forecast period, the average unit price of a cigarillo is expected to be cheaper than a cigarette due to ongoing tax hikes for the latter.
In 2020 the government rushed through a new bill which it hopes will help to reduce illicit trade in tobacco. This bill means that from 1 July 2020, tobacco products, tobacco leaf and tobacco refuse are now prohibited imports and businesses are required to have a permit to import these products.
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This report originates from Passport, our Cigars, Cigarillos and Smoking Tobacco research and analysis database.
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